Chances are, you’re already familiar with Section 179 and the financial upside it presents for equipment purchases. But with year-end quickly approaching, now’s a great time to revisit and explore how this opportunity can help your practice. We’ve outlined some key points physicians should know about Section 179: what it is, who it applies to, how the tax code has changed in recent years and why there’s no time like the present to take advantage of the tax savings.
What Is Section 179?
Section 179 of the IRS tax code is a government incentive to encourage businesses to invest in themselves through the purchase of new equipment or technology. For physicians, it means you can deduct the FULL purchase price of qualifying equipment that is bought or financed during the tax year from your gross income.
How has the tax code changed?
Section 179 has been around for years, but its tax advantages expanded and increased in 2018. With a higher limit of $1 million and bonus depreciation doubled to 100%, 2019 continues to be a favorable tax year to upgrade, expand and improve your business with a new equipment purchase. This includes the purchase of used equipment too.
What is the timeline for 2019?
If you acquire your equipment and put it into use before December 31, 2019, you qualify for this tax deduction.
How much can I deduct for the 2019 tax year?
If you are the legal owner of the equipment for tax purposes, you may be able to deduct the full cost of any equipment you acquire and put into use in 2019 — up to $1 million. There’s a $2.5 million cap for equipment purchases per business. (And if you exceed the $2.5 million spending limit, a bonus depreciation of 100% may apply.)
Can I finance medical equipment and still take the deduction?
YES, and it’s often a great option. Capital Leases and Equipment Finance Agreements qualify for the Section 179 deduction. This means you can make minimal payments in 2019 for your new equipment and still write off up to $1 million of the purchase price.
NOTE: Your finance payments may be less than the deduction amount, which potentially creates a profit when you finance the purchase!
Why should I utilize the Section 179 Tax Code?
Using the Section 179 deduction may lower your tax payment to the government and free up cash for other business needs. By taking advantage of this tax deduction, you are potentially keeping more of YOUR money in YOUR pocket. You can potentially create savings that make your equipment purchase price substantially less.
Does Section 179 Tax Deduction apply to me?
The provisions of Internal Revenue Code Section 179 allows a sole proprietor, partnership or corporation to fully expense tangible property in the year it is put into use.
Can you provide an example of the tax deduction?
Medical Device: $25,000
Tax savings: (assuming 32% tax bracket) $8,000
Cost of Equipment After Tax Savings: $17,000
Are there any caveats for physicians?
Just like with any tax deduction, you’ll need to spend money to save money. Section 179 is not reason alone to make a capital purchase. However, for physicians who are focused on improving patient outcomes by investing in the latest technologies and innovations, Section 179 gives you an added reason to reach those goals before the end of 2019.
Because every physician and practice are different, it’s always a good idea to speak with your tax advisor for more information and tax-related advice. Interested in learning more about EPAT/ESWT devices and integrating this innovative technology into your practice for improved patient outcomes? Contact us at any time.
CuraMedix, the leading U.S. distributor of STORZ Medical devices, provides its partners with exceptional customer service, marketing guidance and technical support. The CuraMedix portfolio of products includes the radial pressure wave and focused shock wave devices.